Bitcoin miner Marathon Digital Holdings has notched itself a new production record, mining more Bitcoin (BTC) in December 2023 than any month before.
According to a Jan. 4 press release, the Florida-based firm reported mining 1,853 Bitcoin in December, a 56% increase from November and a 290% increase from December 2022, claiming:
“We believe this to be the highest monthly total ever recorded by a public Bitcoin mining company.”
Core Scientific previously claimed that it had mined the most monthly Bitcoin in January 2023 after producing 1,527 BTC. Marathon’s recent figures surpass that by more than 300 BTC.
Marathon Digital Holdings’ December 2023 #Bitcoin Production Update is here:
– Record BTC Production of 1,853 BTC in December and 12,852 in 2023 – Increased Average Operational Hash Rate 18% M/M to 22.4 EH/s – BTC Holdings Now Over 15,000, Total Cash & BTC of $1.0B as of…
— Marathon Digital Holdings (NASDAQ: MARA) (@MarathonDH) January 4, 2024
Marathon chairman and CEO Fried Thiel said the record-setting monthly production could be attributed to an 18.4% monthly increase in hash rate to 22.4 exahashes per second.
On Dec. 19, Marathon announced plans to purchase two mining centers for $179 million, which will see an additional 390 megawatts of mining capacity added to its existing 584-megawatt output.
“We continue to target 30% growth in energized hash rate in 2024 and with the recently announced acquisition of the two sites from Generate Capital […] we expect to reach 50 exahashes in the next 18 to 24 months,” added Thiel.
On Dec. 28, Marathon briefly topped the charts as the most-traded public company among mid and large-cap firms on the United States stock market. The company witnessed a staggering $3.3 billion daily trading volume, beating out blue-chip market darlings such as Tesla, Apple and Amazon on the day.
Marathon’s December performance comes amid a renewed push from Bitcoin mining firms to expand operations ahead of an expected approval of a spot Bitcoin exchange-traded fund as early as Jan. 8 and the Bitcoin halving in April.
On Dec. 5, competitor mining firm Riot Platforms acquired an additional $291 million worth of Bitcoin mining rigs, marking the largest increase in the hash rate in the firm’s history.
As the new year kicks off, the crypto ecosystem shows no signs of stopping. Not only has innovation been rapid, but throughout 2023, the industry’s total market cap has more than doubled, setting 2024 up to be an exciting year for new and old investors.
That said, navigating the digital asset realm can be challenging for newcomers, especially given its dynamic nature. However, there are still some basic and effective ways that new investors can explore this space.
Select the right exchange
When venturing into the crypto investment space, selecting the right exchange is probably the most critical first step for anyone. The exchange’s security and reputation are paramount, so investors should choose a platform with a proven track record of safeguarding client investments and providing excellent customer service.
In addition to security, ensuring the exchange supports a wide range of assets is crucial. Whether interested in mainstream cryptocurrencies or exploring niche assets like wrapped tokens and memecoins, the availability of an investor’s desired assets can significantly influence their overall trading experience.
Another often overlooked aspect to consider is an exchange’s fee structure. It is important to scrutinize a platform’s trading fees and other costs, such as holding, withdrawal and transfer rates, as they can vary widely and impact overall returns. An attractive user interface plays a significant role, too, with an intuitive and user-friendly platform greatly enhancing the investment process, especially for those new to the field.
Furthermore, liquidity is a factor to consider because a higher liquidity pool ensures more efficient and faster transactions, enhancing an investor’s ability to buy or sell assets swiftly.
Lastly, an exchange’s regulatory compliance cannot be overstated, with investors ensuring that their platform of choice adheres to local laws and legal standards set in their country. This compliance is essential since it adds a layer of security and protects individuals from future legal and financial complications.
Some exchanges that newcomers to the crypto space can consider include Coinbase, Binance and Kraken. These platforms are known for their highly intuitive user interfaces, robust security protocols and a wide range of supported cryptocurrencies and educational resources.
Pick the right wallet
When dabbling in crypto, investors should carefully select a crypto wallet, as it plays a pivotal role in determining the safety and accessibility of their digital assets. Understanding the distinction between hot wallets and cold wallets is the first step.
Hot wallets are online-based and provide more convenience for regular transactions. However, they are generally considered less secure due to their direct link to the internet (particularly to different decentralized applications and blockchains). On the other hand, cold wallets are offline solutions, such as hardware wallets, which offer enhanced security by being less susceptible to online hacking attempts, albeit at the cost of convenience.
Security features in digital wallets are of key importance. Ideally, individuals should look for wallets that offer robust security measures like two-factor authentication. This adds an extra layer of protection beyond just a password and multisignature options, which require multiple approvals before transactions can be completed.
The importance of backup and recovery options cannot be overstated. Investors should ensure that their chosen wallet provides a reliable and straightforward mechanism for backing up their storage device. This usually involves generating and securely storing a recovery phrase or backup key that can be used to regain access to your funds in case of device loss, theft or failure.
Lastly, compatibility is important. Investors in multiple cryptocurrencies can choose a wallet that supports a wide range of cryptocurrencies and is compatible with different operating systems and devices. Some popular hot wallet options include MetaMask and Exodus, while cold wallet solutions include the Ledger Nano X and S and the Trezor Model T.
Examine different investment strategies
Novice investors should consider exploring a few key, basic strategies when investing in the crypto space, as well as managing their portfolios effectively in the long term. A popular strategy, for instance, is the dollar-cost averaging method, where a fixed amount is invested regularly, smoothing out the purchase cost of a digital asset over time and reducing the impact of market fluctuations.
Another strategy worth considering is the “buy and hold” method, which, as the name suggests, is rooted in the expectation that crypto assets like Bitcoin (BTC) and Ether (ETH) will appreciate in value over time.
Lastly, diversification is another tool that new market entrants can use to minimize risks. This is achieved by investing across different assets, including a mix of established and emerging cryptocurrencies.
Identify blossoming markets with strong fundamentals
While investing in tried and tested cryptocurrencies like Bitcoin is certainly a solid choice for any first-time investor, identifying burgeoning markets with strong fundamentals can also be a potent means of entering the crypto fray. For example, sectors like GameFi, which blends gaming and decentralized finance, have shown immense promise. Giving his thoughts on the subject, Pavel Bains, executive producer for blockchain-based game Mixmob, told Cointelegraph:
“GameFi is an easy concept for new market entrants to understand. Most investors, especially those considering making their way into the crypto market, have played games their whole lives and, therefore, understand the value of in-game assets and in-game currencies. Up until now, they’ve only seen these items operate in a closed, centralized setting. With GameFi, it is possible for these assets to be used as part of an open, real-world economic system.”
Use high-quality investment tools and resources
In the realm of cryptocurrency investing, novice investors can greatly benefit from utilizing tools such as robo-advisors. They offer a low-cost, efficient way for beginners to start investing by automating investment decisions based on individual risk profiles and financial goals. These digital advisers, such as Hedgehog and Wealthfront, use algorithms to manage cryptocurrency portfolios, adjusting an investor’s holdings in response to any pervading market changes and balancing their portfolios to align with their larger investment strategy.
In addition to robo-advisors, using high-quality investment apps and platforms (like Robinhood and eToro) can also help investors. These platforms provide comprehensive tools for research, trading and portfolio tracking and offer real-time market data, analytical tools and insights into market trends, enabling investors to make informed decisions.
Stay informed about recent market developments
Regularly following market trends and news is essential for new investors to understand the current state and potential future directions of the crypto market. This involves keeping track of price movements, industry developments, regulatory changes and technological advancements. Moreover, continuous learning is crucial in maintaining an edge in this dynamic field.
Engaging with the latest financial and investment education resources, attending webinars, participating in online courses, and reading up-to-date publications can also help deepen understanding and enhance decision-making skills.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
As 2023 drew to a close and with the start of 2024, the crypto market is once again experiencing a resurgence, one that is reminiscent of the bull run witnessed back in December 2020.
The ongoing revival has brought with it a renewed sense of optimism and potential, with investors hoping for a major turnaround.
To this point, since the start of 2023, the market capitalization of the digital asset sector has boomed from $831 billion to over $1.8 trillion, thereby showcasing a growth of nearly 100%.
Thanks to this recent uptrend, it is but natural that people have started drawing parallels between the holiday price action of the last bull run and the current market. However, is this resemblance merely coincidental, or are we witnessing the cyclical nature of the crypto market at play?
Antoni Trenchev, co-founder and managing partner at cryptocurrency lending company Nexo, believes that the ongoing price action reflects the 2020–2021 holiday period, which he marked as a prescient moment, heralding the last major bull run before cryptocurrency entered the mainstream. He added:
“Back then, the market’s upturn proved to be far more than merely seasonally uplifted prices. Arriving mere months before the April 2020 Bitcoin halving and riding the wave of enthusiasm around crypto ETFs [exchange-traded funds], this rally was a harbinger of an unprecedented surge in crypto valuations.”
Now, at the tail end of the 2023–2024 festive season, Trenchev believes that we find ourselves on the cusp of another exciting chapter.
“With an early ‘Santa Rally’ already glimmering on the charts and the Bitcoin halving slated for April 2024, we are optimistically poised for what could be another surge, and the bulls are only just warming up,” he said.
Circumstances around crypto bull runs
Jupiter Zheng, partner at institutional asset manager HashKey Capital, told Cointelegraph that, while there are undoubtedly several holiday factors influencing the ongoing market growth — akin to what was witnessed a couple of years ago — there are other peripheral drivers to consider this time around, adding:
“Currently, we have the looming introduction of spot BTC exchange-traded funds (ETFs) and the upcoming halving event in 2024, along with the rapid expansion of the Bitcoin ecosystem, which includes the introduction of new layer-2 solutions and inscriptions. Additionally, the change in the Federal Reserve’s stance from hawkish to dovish also has had a positive impact on risky assets.”
Expanding on Zheng’s narrative, Ryan Lee, chief analyst at Bitget Research, believes that, while drawing parallels between the 2020–2021 bull run and the current crypto market scenario is certainly helpful, this time around, the market is being heavily influenced by different macro conditions, including regulatory updates, technological advancements and shifting investor sentiment.
He noted that, while the last bull run was shaped by specific circumstances, like the COVID-19 pandemic, which spurred quantitative easing and institutional investments, this run is being driven by fluctuating inflation rates, interest rate changes and geopolitical tensions.
Additionally, financial indicators like the drop in the U.S. 10-year Treasury yield and a decrease in the U.S. Dollar Index (a measure of the U.S. dollar’s value relative to the majority of its most significant trading partners) have created a favorable environment for Bitcoin (BTC).
Further bolstering this trend is some optimistic economic data that has emerged, with Lee noting that the U.S. gross domestic product has outperformed expectations, while the Personal Consumption Expenditures (PCE) price index (a measure of consumer spending on goods and services among households in the U.S.) has also shown moderation, staying relatively stable all through 2023. He further added:
“The likelihood of the Federal Reserve maintaining its current policy stance into December has risen above 80%, providing relief to market pressures that have been intensified by this year’s challenging macroeconomic environment.”
Could we witness a crypto rally in the coming weeks?
While the ongoing price action is certainly promising, the market still seems to have not been able to break past the $1.7-trillion threshold cleanly.
Zak Taher, CEO of MultiBank.io — the digital asset wing of the MultiBank Group — told Cointelegraph that his team didn’t anticipate prices to start skyrocketing anytime soon, but given the current market conditions, it does seem as if a major rally may be in the offing: “While short-term market movements can be influenced by various factors, including the greed index, sentiment and market speculation, predicting with certainty whether this rally will evolve into a full-blown bull market in the near to mid-term is challenging.”
Despite the uncertainty, Taher believes that the increasing institutional interest and adoption will continue to play a pivotal role in shaping the next run and providing legitimacy and stability to the market, particularly across Europe and the Middle East.
Denis Petrovcic, co-founder and CEO of Blocksquare — a tokenization infrastructure provider for real-estate assets — shared a somewhat similar sentiment, telling Cointelegraph that, while Bitcoin’s recent surge past the $44,000 mark combined with a growing interest in Bitcoin ETFs might be more than just a seasonal rally, historical trends suggest such surges may not sustain in the long-term.
“The market’s optimism might face challenges with the shifting global economic landscape, including potential policy shifts in 2024,” he said.
However, Lee remains optimistic about the industry’s near-term future, stating that ongoing policy shifts, inflation rate adjustments and geopolitical events will likely play a crucially positive role in influencing Bitcoin’s price.
“Notably, a forecasted shift in U.S. monetary policy, which may lower the 10-year yield, appears promising for risk assets like cryptocurrencies,” he concluded.
Factors that will potentially drive the next bull market
Between Jan. 5 and Jan. 10, 2024, the crypto market is anticipating a decision on the approval of a U.S. spot BTC ETF. If approved, there could be a major influx of funds into the crypto market akin to what was witnessed after the approval of the first gold ETFs back in 2004. Furthermore, the increasing likelihood of a Federal Reserve rate cut in 2024 is another critical factor to keep an eye on, as it could have significant implications for the market.
With the next Bitcoin halving scheduled for May 9, 2024, it is worth noting that the digital asset’s price has shown a pattern of peaking between 368 and 550 days after the event and then bottoming out between 779 and 914 days later. This cyclical behavior is an important trend to monitor since it stands to play a major role in driving investor sentiment.
Furthermore, China’s initiative to internationalize the renminbi represents a significant shift in global financial dynamics, potentially affecting both traditional and digital currencies. Concurrently, the cryptocurrency market is showcasing its diversity, as evident from altcoins like Ether (ETH) and Solana’s SOL (SOL) reaching 19-month highs, even as Bitcoin’s rally shows signs of pausing.
Lastly, in a much broader context, Brazil’s growing consideration of digital currencies for financial transactions within the G20 reflects an increasing global interest in the potential of digital currencies.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
As the crypto community eagerly awaits the United States Securities and Exchange Commission’s (SEC) decision on spot Bitcoin (BTC) exchange-traded fund (ETF) applications, some traders are using this time of suspense to gamble on whether they get approved by Jan. 15.
At the Polygon-based gambling site Polymarket, traders have placed their “Yes” or “No” bets on whether the Bitcoin ETF applications will be approved. At the time of writing, around $1.5 million worth of bets have been placed, with most of the traders buying shares of “Yes.”
The value of a share, which represents the odds of whether the result will be a yes or a no, fluctuates similarly to the crypto market. At the time of writing, the cost of a Yes share is $0.79, while a No share is $0.21. One of the top holders with the pseudonym “kiwi” holds around $421,000 of Yes shares. On the other hand, the top holder for No holds only around $15,000 in No shares.
According to Polymarket, the market will resolve to “Yes” if any spot Bitcoin ETF receives approval from the SEC by Jan.15, 2024, at 11:59:59 pm Eastern Time. Otherwise, this market will resolve to “No.” This means holders of either bets will see their earnings or losses by the deadline set.
The site says the primary resolution source for the market will be information from the SEC. However, it added that a consensus of credible reporting may also be used to resolve the market.
Meanwhile, some Redditors criticized the betting, while others got creative with their jokes. In the Cryptocurrency subreddit, a user called the bet stupid and described it as “putting up dollars to win dimes.” On the other hand, a community member wrote that they were about to lose their kid’s college fund, and another apologized to their “crypto grandkids” for what they were about to do.
The Central Bank of Nigeria (CBN) has approved the Africa Stablecoin Consortium (ASC) to pilot the cNGN stablecoin in its regulatory sandbox. The new stablecoin is to be launched on Feb. 27, 2024.
In a blog post, the ASC — a collaboration of Nigerian banks and fintech operators — said the cNGN stablecoin complies with the regulatory requirements and standards set by the CBN, the Nigerian Securities and Exchange Commission and the Nigerian Financial Intelligence Unit. The group said it is engaging with the regulators to ensure compliance, consumer protection and transparency.
The cNGN serves as a complement, not a substitute, for the eNaira, which is the central bank digital currency (CBDC) issued by the CBN. Unlike the eNaira, which the CBN created with broader capabilities, the ASC oversees the cNGN. The stablecoin is currently interoperable with strategic blockchains like Bantu and BNB Smart Chain, with plans to extend compatibility to all major blockchain networks soon.
According to the blog post, the cNGN token is pegged 1:1 to the Nigerian naira, the country’s fiat currency, and is backed by Naira reserves held in designated commercial banks. The stablecoin aims to bridge the gap between the naira and digital currencies in the global market through blockchain technology.
The cNGN aims to help Nigerians abroad send money to their families in Nigeria without waiting for remittances to go through. It also aims to eliminate the expensive fees associated with traditional international transactions.
According to the blog post, the CBN wants the financial system to support and facilitate blockchain technology. In a circular sent to banks on Dec. 22, 2023 the CBN recognized the increasing global demand for and adoption of crypto and lifted restrictions on Nigerian banks facilitating cryptocurrency transactions.
On Dec. 4, 2023, Italian Prime Minister Giorgia Meloni held a press conference in which she outlined the key priorities for the country during its 12-month G7 presidency. These include supporting African development, backing Ukraine and addressing issues around AI. Meloni said of the challenges posed by AI:
“I am hugely concerned about the impact (of AI) on the labor market […] Today we are faced with a revolution where [human] intellect is in danger of being replaced.”
While the Italian prime minister didn’t elaborate on specific concerns about AI, she revealed an intention to hold a special AI-focused session of G7 members before the first leaders’ summit in June. The topic of AI’s influence on the labor market has occupied the Italian government for some time. In May 2023, the country allocated 30 million euros ($33 million) toward the Fondo per la Repubblica Digitale (FRD) to enhance the capabilities of the unemployed and those whose jobs are at risk of automation and AI takeover.
In March 2023, the Italian Data Protection Authority ordered the immediate limitation of data processing for local users by OpenAI, the United States-based company behind ChatGPT. The agency has also noted a lack of legal basis to justify the mass collection and storage of personal data by AI as it trains its algorithms.
The ban was lifted a month later when ChatGPT met all the requirements. However, in November, the Italian Data Protection Authority announced the launch of a “fact-finding” investigation, in which it will look into the practice of data gathering to train artificial intelligence (AI) algorithms.
Ernest Cline, the author of Ready Player One, and Dan Farah, the producer of Steven Spielberg’s film adaptation of the story, have partnered with artificial intelligence (AI) and metaverse company Futureverse to develop a digital universe for Ready Player One.
Together with Futureverse’s Shara Senderoff and Aaron McDonald, Cline and Farah will co-found Readyverse Studios, a firm that will launch a metaverse called the “Readyverse,” which they described as a “platform of interconnected digital experiences.”
We couldn’t be more excited to announce that we’ve teamed up with @readyplayerone creator and producer to launch Readyverse Studios to bring leading IP and brands to the metaverse. pic.twitter.com/6sU6FpOSdE
Futureverse announced on X (formerly Twitter) that Readyverse Studios has partnered with Warner Bros. Discovery to bring the Ready Player One franchise exclusively to the metaverse and across Web3. In addition, Readyverse will maintain exclusive Web3 rights to all future intellectual property (IP) from Cline.
In an interview with Hollywood Reporter, Farah said they have already started conversations with major studios and rights holders of IPs, and they’re leaning into figuring out collaborations with Readyverse.
In the announcement, Futureverse said the Readyverse will “champion the principles of the open metaverse.” This includes interoperability, security, decentralization, community-owned infrastructure and provable digital ownership, according to Futureverse.
In 2022, Web3 platforms created the Open Metaverse Alliance to ensure that the metaverse retains principles like transparency, inclusiveness, decentralization and democratization. The organization was established by prominent Web3 names such as Animoca Brands, Dapper Labs, Decentraland and The Sandbox.
In 2022, an executive said Ready Player One’s depiction of the metaverse was unrealistic. At the Korean Blockchain Week 2022, Everyrealm CEO Janine Yorio said the movie gave the community a glimpse into life in the metaverse. However, the executive argued that many metaverses are being developed for the desktop instead of being in virtual reality, like in the movie.
Bitcoin (BTC) trading OG Arthur Hayes now predicts an up to 40% BTC price crash in March.
In a blog post on Jan. 4, the former CEO of crypto trading giant BitMEX warned readers of a week of turmoil due to hit financial markets.
Hayes on BTC price: “I could easily see a 30% to 40% correction”
Bitcoin bulls are feeling broadly confident this year as the United States’ first spot Bitcoin exchange-traded funds (ETFs) are slated to get regulatory approval.
Combined with the block subsidy halving in April, the events constitute what could be a landmark year for BTC price expansion thanks to institutional money and wider adoption.
That said, for Hayes, all is not destined to go up in a straight line. The reason, he says, lies with the U.S. Federal Reserve and its attempts to steady an economy that is cutting inflation but saddled with instability.
In particular, March will see the Fed’s Bank Term Funding Program (BTFP) — a facility set up in response to the 2023 regional banking crisis — come to an end. One week later, the Federal Open Market Committee (FOMC) must decide whether to hike, hold or lower interest rates.
“The BTFP expires on March 12th, and the Fed rate decision is announced on March 20th. There are six trading days between these two crucial decision points,” Hayes noted.
“If my forecast is correct, the market will bankrupt a few banks within that period, forcing the Fed into cutting rates and announcing the resumption of the BTFP.”
Bitcoin and crypto are highly sensitive to changes in macro liquidity, and a Fed bailout would certainly help their cause — but only after an initial shock caused by a rerun of the 2023 volatility.
“Bitcoin initially will decline sharply with the broader financial markets but will rebound before the Fed meeting. That is because Bitcoin is the only neutral reserve hard currency that is not a liability of the banking system and is traded globally,” Hayes continued.
“Bitcoin knows that the Fed ALWAYS responds with a liquidity injection when things get bad.”
He added that Bitcoin “knows printed money in whatever guise is always printed money,” and that it would thus “rise sharply before and into the Fed’s eventual capitulation to restarting money printer go brrr.”
The kind of drop on the cards lies between 20% and 30% from the level at which BTC/USD trades when March begins. The halving, Hayes explains, will then serve as the ultimate catalyst for upside continuation.
He summarized:
“I could easily see a 30% to 40% correction due to a dollar liquidity rug pull. This is why I cannot buy Bitcoin until these March decision dates have passed.”
Bitcoin analysts stay split on ETF impact
Closer to the present, ETF approval narratives continue to induce BTC price volatility of their own.
Concerns over a potential rejection sparked a near 10% rout this week. At the same time, various commentators believe that Bitcoin is already due a more substantial correction — even if the ETFs become a reality.
Arguing against this is John Bollinger, creator of the Bollinger Bands volatility indicator, who predicts a positive reaction based on his tool’s readings.
“I think it breaks higher,” he concluded on X (formerly Twitter) about BTC/USD.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Spain’s central bank, Banco de España, has chosen its collaborators a year after publishing an open call for partners to participate in central bank digital currency (CBDC) tests.
On Jan. 3, the central bank published a resolution announcing its partnership with Cecabank, Abanca, and Adhara Blockchain.
The pilot of the wholesale CBDC will take place in the next six months and will feature the simulation of the processing and settlement of interbank payments with a single tokenized wholesale CBDC and by exchanging several wholesale CBDCs issued by different central banks.
In another part of the experiment conducted with the help of the Cecabank-Abanca consortium, the wholesale CBDC will be used to settle a simulated tokenized bond.
Three companies were chosen from the 24 applications the central bank has received over the past year. While both Cecabank and Abanca are Spanish, the headquarters of Adhara Blockchain is in the United Kingdom.
The Spanish CBDC program is unique, as it was publicly stated to be independent of the digital euro project that would cover all economies in the eurozone if implemented. Meanwhile, the Spanish Ministry of Economic Affairs and Digital Transformation announced it would implement the European Union’s Markets in Crypto-Assets Regulation six months before the deadline.
Spaniards themselves haven’t expressed a significant interest in using the digital euro. In a survey in October, 65% of respondents said that they would not use the pan-European CBDC to complement their regular payment methods.
The long-awaited potential approval of a spot Bitcoin (BTC) exchange-traded fund (ETF) in the United States could mean the market sees Bitcoin supply suddenly drop as funds snap up as much as they can, some market observers have predicted. With prominent firms like Ernst & Young expecting U.S. Securities and Exchange Commission (SEC) approval to trigger massive demand from institutions, will the financial giants behind these ETFs leave any actual Bitcoin on the market for the rest of us?
A U.S.-based spot Bitcoin ETF could bring up to $30 billion of fresh cash into Bitcoin, crypto entrepreneur and investor Lark Davis estimated in September 2023. In such a scenario, spot Bitcoin ETF issuers would buy up about 50% of all Bitcoin on crypto exchanges to back their ETFs, he projected.
Estimates are that a spot Bitcoin ETF would bring 20-30 billion of fresh cash into Bitcoin. That would buy about half of all coins on exchanges at current prices.
For reference here is what happened to gold when it got its first ETF approved on US markets.
But buying as much Bitcoin as possible would likely get tricky for anyone, several industry executives and analysts agree.
“Theoretically, a company or government could attempt to buy a significant amount of Bitcoin, but acquiring all Bitcoin in circulation is highly impractical, and we still have a significant, unreleased supply of Bitcoin,” Valkyrie CEO Leah Wald told Cointelegraph. Wald noted that Bitcoin’s supply is capped at 21 million coins, from which 1.4 million BTC are yet to be mined. She added:
“Bitcoin’s decentralized nature and the fact that many holders might refuse to sell at any price create a natural barrier against monopoly.”
“The scarcity principle — a well-established economic principle — tells us that the price of a scarce good will rise to meet demand,” Hougan said. “In other words, if someone tried to ‘corner Bitcoin,’ the price would rise and rise and rise as more and more reluctant sellers were met,” the exec added. However, Hougan conceded that someone could still corner a significant amount of Bitcoin.
Jan3 CEO Samson Mow echoed Hougan’s stance, expressing confidence that it would be difficult to buy all Bitcoin in circulation due to extremely high prices fueled by products like a spot Bitcoin ETF. “The price people are willing to sell increases when there are fewer coins available for sale,” he stated.
According to Mow, BTC holders will have to think hard about whether they should sell their Bitcoin, given the depreciation risks of fiat currencies like the U.S. dollar or the euro. He said:
“So as funds buy more BTC and increase their assets under management, it will become harder and harder to find willing sellers.”
Despite high competition among potential spot Bitcoin ETFs, these funds are unlikely to try to buy all the Bitcoin in circulation, according to David Gerard, author of the book and crypto blog Attack of the 50 Foot Blockchain.
“ETFs are part of using Bitcoin as a dollar derivative. The issuer doesn’t care about the cryptocurrencies at all; they care about the dollars they can get from them,” Gerard told Cointelegraph. He added:
“Lots of holders have way more Bitcoin than there are actual dollars trying to buy — the markets are thin.”
Although many industry watchers expect spot Bitcoin ETFs to fuel massive demand and thus positively affect the BTC price, some execs like BitMEX co-founder Arthur Hayes believe that successful ETFs could “completely destroy” Bitcoin. According to ARK Invest CEO Cathie Wood, some investors might “sell on the news” of spot Bitcoin ETF approval in the short term.
Meanwhile, some believe that the potential approval of a spot Bitcoin ETF in the U.S. could have little to no impact on markets, as multiple spot Bitcoin ETFs have been trading for years in other parts of the world, such as Canada.
However, the size of U.S. capital markets is so large that this comparison may be irrelevant, according to Bloomberg ETF analyst Eric Balchunas. The crypto market has never seen an injection of capital of this potential magnitude, as Balchunas and other analysts predict.